In this segment, the speakers explain a niche investment strategy where investors specialize in obtaining entitlements for land and then flipping the entitled parcels to builders. By securing zoning changes, site plans, and other approvals, investors raise the land's value without undertaking construction, allowing builders to acquire ready‑to‑build sites and avoid the two‑year entitlement timeline and associated staffing and financing burdens. The discussion also highlights the inherent risks for investors, who must front soft‑cost expenses—such as architects, surveyors, and land‑use attorneys—without any guarantee of a payoff, making entitlement a speculative but potentially high‑return activity.
I mean, there's a whole set of— sorry, but there are investors that specialize in entitling land and flipping it. That's right. You raise the value of the land by entitling it, but then you won't have to go through the pain of building it for the next 2 years.
And the builder, the benefit for the builder is they don't have to, you know, have the staff and the funds available to tie up that land for 2 years that it might take to get all that stuff done on a commercial property. Then they can just go ahead and hit the ground running, get the construction loan. building, you know, within weeks instead of months.
And some of it is also a matter of risk, because sometimes you will tie up land and spend money on soft costs to get it rezoned, and there's no guarantee that it's going to go through. And so every time you're spending money on site plans, architects, surveyors, land use attorneys to get something rezoned, you're spending that cold hard cash There's no guarantee that there's going to be a payoff. And so there's always a level of risk there. So yeah, I mean, builder is happy to, to take the project over when it's already 100% ready to go because they don't have to take on that risk of entitlement.
And depending on what kind of a property it is, I mean, you could be generating millions of dollars worth of equity if it's a big subdivision project or something like that. You turn around and sell it to a builder. Sometimes it's It's just amazing how much it's worth to them not to have to go through all that process and have that land, that money sitting idle.
